Economic Growth in Haiti - a Mere Illusion?*

By Lundahl, Mats | Ibero-americana, July 1, 2006 | Go to article overview

Economic Growth in Haiti - a Mere Illusion?*


Lundahl, Mats, Ibero-americana


I. INTRODUCTION

In Haiti, real per capita income has been falling for at least half a century, probably more. The country continues to be the poorest - by far - in the Western Hemisphere, and the political history is no better. On the contrary, it can only be called dismal, and this state of affairs has unfortunately had a pronounced negative impact on growth and development.1 Haiti has rarely, if ever, had an honest government. Ever since the first years of freedom at the beginning of the nineteenth century, the country has been caught in a downward spiral where government action has mainly had negative economic consequences. A series of kleptocratic governments evolved out of a colonial heritage which had as one of its main ingredients the unwillingness of the dominant classes to undertake productive work. Over time a pattern was established where the road to riches went instead via control of the state apparatus and the possibilities of taxing the population at large and generating rents which could be appropriated by those in power. This pattern, in turn, served to distort economic incentives away from production, competition, and reduction of costs, toward establishing good connections in the government, kickbacks, and operations in an environment characterized by corruption, privileges, and rent-seeking of all kinds. As a result, growth suffered and economic stagnation and retrogression became the rule instead of the exception.

Growth and employment are an imperative in Haiti. Nobody in his or her right mind would think that Haiti's economic problems can be solved by a mere redistribution of the available pie. Such redistribution is politically very difficult, would have to be carried out on a large scale, and if it were carried out would presumably reduce efficiency and production in the economy. The existing distribution of land is far less unequal than in the majority of the Latin American countries (Lundahl, 1996; République d'Haïti, 2004:536-52), which means that redistribution would have to take place mainly in urban areas. This redistribution would then involve the modern sector of the economy, business establishments that would be notoriously difficult for the uneducated poor to run. Thus, the likelihood that wholesale redistribution will be counterproductive is very high. Rather, the feasible road to higher incomes for the poor goes via economic growth, a growth that leads to the creation of new jobs. The present essay endeavors to identify some possible areas that may produce growth, employment, and higher incomes. In the best case, it will also be possible to undertake a redistribution, in favor of the poor, of the additional income generated by growth, though only if the government has the will and the political clout to make this possibility a realistic one.

The need for growth, employment, and incomes is exceedingly strong. More than three-fourths of all Haitians live below an absolute poverty line of US$2 per day (defined in purchasing power parity terms at 2000 prices), and well over half live in extreme poverty (less than US$1 adjusted for purchasing power parity per day). Haiti is also a country of gross income equality. The country's Gini coefficient is 0.65, which puts it in the same category as South Africa and Brazil.2 Unfortunately, no immediate silver lining is in sight. The Haitians are involved in a survival struggle, in an environment characterized by a decaying infrastructure. Central institutions like the parliament, the police, and the judiciary are all more or less paralyzed, and the maintenance of public order is dependent on the presence of foreign nations. Only fools would expect growth to take place in this kind of environment in the short run.

The present essay deals with the possibility of growth in the longer run, assuming that peaceful conditions prevail that will pave the way for positive government action, focused on development, as well as private investment initiatives.

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